Friday, October 17, 2014

U.S. vs. China+Russia - the Tale of the Tape

About 70 years ago, there was a big battle for supremacy among all of the big countries on Earth, called "World War 2." The countries that came out on top of that battle were the United States, Russia, and China. Following the end of that war, there was a protracted low-intensity power struggle (the Cold War) between those three winners, which Russia lost, and the United States and China - who started out as enemies, but became de facto allies in the 1970s - won.

People in the U.S. seem to tacitly assume that because we won those two big power struggles, we'll win the next one - if there even is one at all.

During the 1990s, this seemed to be predicated on the idea that the U.S. would win the ideological battle - that democracy, capitalism, and human rights were such an attractive and potent combination that everyone would settle on these systems, and then there would be no need for further power struggles among nations. This was the "End of History" idea. It may still work out that way, but it hasn't yet - about 40% of the world has resolutely refused to adopt U.S.-like systems, and democracy has actually been in retreat since slightly after the turn of the millennium, if you believe Freedom House.

In the last few years, it has finally sunk in that the "End of History" idea is not right (at least, for now). People are waking up to the possibility that the spread of democracy and human rights from 1945 to 2000 might have been partially a byproduct of U.S. power.

But there is still the notion that the U.S.' economy and military are both so strong that we are guaranteed to retain preeminence over any foe or combination of foes.

But now consider the combination of China and Russia, the other two victors of World War 2. These countries are each poorer than us on a per capita basis, which reflects the inferiority of their economic and political systems in terms of creating human welfare. But their draconian systems have, so far, allowed them to retain control over vast territories (17% of the world's land area) and huge populations (21% of humanity).

What's more, these countries are now both clearly opposed to American power and influence - Russia more so than China, given the war in Ukraine. The two countries have resolved the enmity and territorial disputes that existed between them in the Cold War, and are now de facto allies.

So I thought it would be useful to compare the "tale of the tape" - the basic resources that the U.S. possesses, compared to the emerging alliance of Russia and China. Here is a table I whipped up:

All data are from 2012 or 2013. The source is Wikipedia.

Notice how in all categories except for nominal GDP, the U.S. is outclassed by the combination of the other two powers - sometimes by an enormous margin.

There are some caveats, of course, including but not limited to the following:

* Given China's greater growth rate, the GDP and Manufacturing disparities will continue to move in the direction of China+Russia.

* The nuclear warhead number is the sum of both tactical and strategic warheads, though the strategic-only numbers are similar.

* Proven fossil fuel reserves are not equal to economically recoverable reserves; the U.S. has more advanced extraction technologies.

* Active military personnel are not the same as total military personnel; the total number favors China+Russia even more.

* I did not include specific weapons systems, since I am not sure about the strategic relevance of any of these. For example, Russia has many more tanks and mobile ICBMs than the U.S., while the U.S. has many more aircraft carriers. I am simply not sure how useful tanks, mobile ICBMs, and aircraft carriers really are at this point. Nor do I know about differences in weapon quality. But it's worth noting that in both WW2 and the Cold War, GDP ended up mattering more than initial levels of military tech in determining the eventual victor.

* Some argue that China and Russia are not true allies. However, this was also true of the U.S. and China in the latter part of the Cold War - and, for that matter, the U.S. and USSR in WW2. Predictions that Russia and China will come into conflict over Russia's Far East have so far proven to be total fantasy, and the two countries have moved ever closer together.

* The U.S. might be able to count on allies in an actual war - Britain, France, and/or Germany in a European war against Russia, and Japan and/or India in an East Asian war against China. So this might not be an appropriate comparison; indeed, I think that building strong alliances is our best hope of countering a China-Russia alliance. Note also that China+Russia might be able to draw on some allies as well, such as Pakistan (against India) or North Korea (against Japan).

Anyway, I think that the numbers should demonstrate to all but the most blinkered observers that the U.S. is not facing an opponent whose resources are far less than ours, as we did in both WW2 and the Cold War. For the first time since the early days of our country, our rivals have more resources than we do - and the disparity is getting larger every day. Despite the obvious superiority of our governmental and economic systems, we are not guaranteed to prevail in a power struggle against a Russia-China axis. Henry Kissinger knew this, which is why he always warned that we should be closer to either China or Russia than those two countries were to each other. But in recent years that has proven to be impossible.

Now hopefully, this blog post, and others that point out the same facts, won't matter at all. Hopefully, there will be no new Cold War or anything like it. But just in case this is where things are headed, it pays to be honest with ourselves about the facts.

52 comments:

Throw in Japan on the US side as well, and also quite possibly, South Korea on the US side and North Korea with China/Russia. A possible catalyst to any major open war between the superpowers would involve either an initial fight between China and Japan or the two Koreas.

Also, China is not interested in world domination, and is very much interested in trade and wealth. So no classic 'communist' cold war. The Chinese have historically been of the opinion that "we are the best, China is the center of the universe and civilization, what more do you need?'. They are not interested in exporting their ideology anymore. So there may be a fight over Taiwan or some empty islands in the China sea (for resources), they aren't interested in invading their neighbors.

I'm very skeptical that this China-Russia axis will happen, for two reasons:

* The Russians are really shitty allies, they really, really suck at keeping friends and make no compromises with them. The Ukraine crisis is an excellent point - they destroyed any good will they had in the country and an invaluable ally for zero gain. They regularly abuse their other two "allies", Kazakhstan and Belarus by banning imports from there. The Eurasian union is more like Russia and colonies.

* The Chinese have never historically participated in "Great Game" colonial imperialist conquests. Those are simply eurocentric concepts and the Chinese (quite correctly in my view) don't see them worth the trouble. The one exception - Mao's communist internationalism is explained by his fear of a party coup in China, orchestrated by the Soviets, which was a very valid concern. I doubt that China will ever make any sacrifices on behalf of Russia. Sure they might be dicks on the Security Council, but that is about it.

Modern military technology and ability is much more of a trade able good, so comparisons of gdp on PPP basis make no sense in that context.

As to manufacturing, what is the Chinese value added? 5%? Their technology is so advanced they cannot even build modern jet engines and not for a lack of trying. Russia would not sell it to them, which tells you all you need to know about the quality about their alliance.

Speaking of alliance, the western alliance has GDP 4.5 greater than the russian/ Chinese one.Finally, what's the future? The Russians are dying off, while China is getting old fast. Their labor force is already shrinking.

Hi again. China was also with the allies in the Great War. See http://blogs.nottingham.ac.uk/chinapolicyinstitute/2014/08/07/remembering-china-in-the-great-war/#.VEIqz2ssbUE.gmail

At that time, China had just overthrown the Qing government and Chinese intellectuals were looking at the Western democracies for a model of government. Unfortunately at the Treaty of Versailles, the Western powers including the USA let China down and handed the German Territories in China to Japan. This led to the May 4th Movement, see: http://en.m.wikipedia.org/wiki/May_Fourth_Movement

I understand the Chinese intellectuals became disillusioned with Western style democracy and looked at the Communists in Russia for leadership.

The Western powers now stand poised to make a strategic choice. Will they be able to demonstrate the moral superiority of their democracy to the Chinese people, or will they once again push China to Russia?

The European war mentioned between USA and Russia would have to be more like WW2. The Europeans would have to fight first or at least commit to fighting alongside the USA if a war broke out. If they did not fight first or commit to fighting alongside the USA then the USA would just leave them to fight the Russians alone. It would not be able to get involved without European willingness. The only way I can see such a war starting is a large scale offensive by Russia into Europe and I regard that as unlikely.

Far more likely is a war somewhere other than in Europe. China is territorially aggressive in Asia.

Europe would sit out any Asian war. So that would leave the USA alone with any of their Asian allies. If Russia then took this war as an opportunity to expand in Europe then we would be back to WW2 with Russia and China against USA and Europe. However I am not sure that Europe is up for it at all so they would concede Russian expansion up to the borders of Germany.

But the reverse of the above is that Russia expands first drawing in the USA to Europe then China expands after that and gains easier victories.

It is still WW2 if they act in unison with a plan.

I hope that it never happens and it very much depends on the personalities in charge in Moscow and Peking. If a Putin like man takes charge in China then anything can happen.

If it did I would still expect the defeat of China and Russia but with all the appalling suffering of war.

If China and Russia couldn't form a meaningful alliance when they both had explicitly Leninist-internationalist governments, what makes you think they will now, that they both have explicitly nationalist governments? Especially when they share a land border and both seem bent on petty expansionist policies? Seems like they're just as likely to butt heads with each other was with the West.

The U.S. already has stronger alliances with NATO AND Japan AND Korea AND Australia AND Canada AND much of the rest of the Americas than China and Russia do with each other. India is just as chilly toward China as they are toward us. Should we solidify our alliances to isolate our potential rivals as much as possible? Absolutely. And we should convince other countries to pay for more their own self defense But we're far, far ahead of any Russo-Chinese alliance in that regard. Furthermore, in any open conflict, both Russia and China have restive minority factions much more likely to function as a fifth column than any Western country does.

Both countries, but especially China, have to spend a huge part of their military resources just to keep their own populations under control. You don't honestly think if China and the U.S. went into open conflict, China would decide it's a good time to spend LESS money and effort on keeping internal dissent under wraps? That Russia would just say, "Chechnya? Sure, go ahead." The U.S. is no social utopia, but we're able to project our military power thousands of miles away because we don't need it to keep the hordes from killing the political elite.

Which of course brings us to that other American advantage: the Pacific and Atlantic Oceans. Our military have already crossed them. Neither Russia nor China has the capability to attack the U.S. mainland with anything short of ICBMs.

As other commenters pointed out, conflict would be bad for both sides, but it would be much worse for the economies in Russia and China.

This is honestly one of the dumbest analyses I've read in a long time. A textbook case of being blinded by the numbers.

My first though is how much does the Chinese export market depend on the U.S. consumer market? What fraction of their GDP?

Also since it takes two to tango, how much does the U.S. corporate sector depend on China for earnings, profits etc.?

Seems to me they're dependent on each other. The Chinese are buying U.S. debt to keep their exports competitive and their economy humming.

The U.S. could use that money to build infrastructure, etc., instead we use it to compensate for our relatively low tax rates on the rich and corporate sector and we waste it on a bloated military. Why? Class interests.

Agreed. The day the US and Europe simply refuse to buy manufactured goods from China is the day the Chinese economy and government implode.

In both China and Russia large portions of the elites want to get themselves their children and their fortunes out of those countries to England or the United States.

The West will not come into military conflict with Russia or China unless Russia attacks a member of NATO (in which case Russia would alienate the whole world) or China attacks Taiwan or Japan (in which case China alienates the whole world). China is more likely to have a shooting war with India or Vietnam and if it provokes either of those - it alienates the whole world.

China and Russia want to lead but they cannot find anyone (other than Mugabe in Zimbabwe) who wants to follow.

Judged by the mass emigration of political and economic elites from China to western countries, China does not have the will to engage in a power struggle against US.

I think the greatest danger to world stability is the downfall of the US like what happened to the Roman empire 2 millenniums ago. The capitalists will dig their own graves because of their sheer greed and stupidity, as predicted by Marx and Piketty. The ideology of Libertarianism is a symptom of the self destructing nature of capitalism. The worst effect of it is the destruction of social contract and with it social cohesion. As a result, the US society is increasingly polarized. The threatening of default on US debt by the libertarians might well be the first sign of the long term declining of the US empire.

Explicit default is economic suicide. This shows how corrupt and short sighted the US elites have become: they're willing to destroy the nation for a few billions more tax cuts. No regard for public good.

The downfall of Romans was not a testament to barbarian strength, but how corrupt and incompetent the Roman elites had become. I suspect the downfall of American empire will be along the same lines.

The way I see it, the greatest threat to American power is not a challenge from Russia and China, but the cynical libertarian profiteers and fanatical "government is the problem!" "free market" zealots :)

Libertarians(aka the libertards) are a jewish invention like Marxism. What else did you expect? Ron Paul is surrounded by endless Jews. Alex Jones? Same thing. They are never called out on it. I mean never. Of course they want to default on the debt. They want to destroy the US and completely give the rule of law to capital owners. There will be no "United States" in general. The world will be divided into markets aka the market state.

China was following Stalinism, not Bolshevism. Bolshevism was the capitalist scam. They invented that turd through jewish brokers who ran the scheme for the first decade raping and killing the Russian peasantry. Leon Trotsky was outright "painting" in freaking New Amsterdam before being "called up". Stalin tried to turn it into Russian colonialism and succeeded for awhile, turning the work camps on eastern europe, 'liberating" the Russians. A big reason why the gentile love Putin. The War generation and Baby Boomers remember as youth the great Russian economic miracle of the post-war era. To them it was far better what came afterward. To them the decline was caused by "liberals" working to undermine the country. Thus we see Putin and mini-Soviet wannabee.

The Greatest threat to world stability is the elevation of corrupt intolerant, Nationalist, Religious or Ethnic parties that trample the rights of the minorities. ISIS did not happen in a vacuum. It happened in an environment where Sunnis are dominated by Shia. US "We don't do Nation Building" policy creates and legitimizes states that lack institutions committed to protection of minority rights from the tyranny of the majority. It amounts to, "Vote for the warlord/mafia of your choice".

The FSU kept the lid on many of the Nationalist, Religious and Ethnic parties, sometimes with force and deportations to enforce multicultural tolerance. US anti-Russian policies have replaced secular governments that were more tolerant with Nationalists and fundamentalists. This has led to problems in Afghanistan, Yugoslavia, Georgia, Ukraine, &c. The NeoCon strategy is Neocolonialism warmed over; divide and conquer, bribing one faction to extract the wealth of minorities.

The biggest threat to world stability is economic neocolonialism and powerful wealthy elite special interests, uncontrolled by the greater population.-jonny bake

Russia has ripped off every western company that invested in Russian oil and gas. Now China and Russia have agreed that China will invest in Russian energy which is great news for the West. Surplus Chinese savings will be diverted to Russia where the money will be stolen and then the Russians will find out what happens when you cheat an investor which has the world's largest army.

I guess I believe in a sorta "end of History" scenario. But "Truth, Justice and the American Way" didn't win... Globalism did.

I think Globalism has won and anyone who fights it, be it China, Russia, the US or EU will end up losing.

I see Russia's invasion of Ukraine as a test of this Idea. While there is no way Russia will give back Crimea, already the forces of globalism have demonstrated to Moscow further aggression on their part will fail any rational cost benefit analysis.

I am not saying Globalism will end armed conflict. Far from it. It will be (is) kinda like the cold war turned down to medium low... without the credible threat that we will annihilate each other. The great powers will still fight proxy wars. They may commit their own troops to conflicts but Never directly against each other. Globalism prevents any set of great powers from letting any conflict become too painful for the other great powers... not by threat of war but because of the economic consequences. While a significant degree of military power is still necessary for a great power to compete it's a nation's Economic power that has become the Strong force.

Under these restraints the great powers have no incentive to form militantly antagonistic blocs like in the past... but their Military industrial complexes still do.

Not very long ago the USSR exerted hegemony over Eastern Europe. This system collapsed. I would like to see an analysis by a smart economist like Professor Smith discussing whether being the hegemon is an economic plus or not. Did dominance over the nations of the Warsaw Pact aid Moscow economically or was it a drag? It seems to me that the Japanese Imperial system would have been able to buy a lot of oil for the price that they paid to temporarily control Brunei. It is also not clear to me whether the resources required by the United States to influence the Middle East are being spent in the most effective way.

I was reading about the 'wisdom of crowds' elsewhere.To me, this looks like a good case.At the moment, it seems that rich Chinese and Russians seem to want to relocate to US/EU.I would take that to mean their chances are better here then there, so we are winning whatever battle it is.If/ when that tendency reverses, I would take it to be a leading indicator of the opposite.

I very much enjoy your economics posts. They appear to me to be nuanced and informed (though I am not in much of a position to tell). However, from the perspective of someone working in IR, your politics posts are really lacking in nuance and poorly informed by both theory and empirical information. I'm not sure they contain any worthy insights, given those deficiencies. As one regular reader, I would prefer if you would confine your efforts to your area of comparative advantage, given that you only have so much time to write posts. I'm only posting this on the chance that, if true, any of this would be of import to you.

Here is a great article illustrating that while total GDP may be the key strategic variable, the game lies in tactical shifts in alliances.

For example, after the fall of France in 1940, the Allies / Axis GDP ratio was a paltry 0.38. Given that, one would think the Axis would prevail.

However, Churchill made the tactical decision to fight on while waiting for the US and/or USSR to commit. Meanwhile, Hitler made the tactical decision to wipe out the USSR while the Axis was riding high. We know the rest.

Dharmaraja: It's a bit more complicated than that. In the last year of peace, Germany imported 80% of its oil, so when Churchill decided to fight on, the British Naval blockade of Europe actually *forced* Germany to invade Russia. And even then, Germany in Russia depended on horse transport, and it was never able to deploy enough u-boats to defeat the UK because it had to make do with about one third of the oil that the UK could import.

In fact, I think you can say that the UK declaring war in 1939 was a way of ensuring that Germany had to face a two front war with a permanent oil shortage. Had the UK remained neutral, Germany could have pushed through Poland into the USSR, and had it managed to defeat the USSR and gain control of Soviet oil, it would then have achieved strategic invulnerability, and would eventually have built a Navy and invaded the UK.

So these decisions were very much long-term strategic, and not just tactical, or a delaying move while waiting for the US.

China today faces some of the same long-term issues that Germany did in 1939, particularly shortage of domestic oil and other raw materials. Let's hope the Chinese leadership studies WWII closely.

The point of the article, which I encoursage everyone to read, is that while "resources lead to production/GDP lead to victory," how you get there is a matter of tactical decisions.

Your description of early German planning seem colored by the outcome. Remember, the USSR and Germany had a non-aggression pact at the beginning of the war. That freed Hitler from the classic Germany problem of a two-front war. If Germany had defeated the UK and France rather than just France, it would have been freed to import whatever oil it needed.

As it turned out, defeating France and gaining control of the Romanian oil fields gave Germany (over)confidence in its overall position to launch Operation Barbarossa, at the point when the Allied / Axis GDP ratio was at its low point of 0.38.

The article also outlines Japan's decisions in the context of changes in the tactical landscape (fall of France, gain of Romania, Operation Barbarosa) as they relate to the strategic goal: resources, production/GDP, victory.

Put China with USSR for the Cold War, which was the case for most of it. Your table above would only differ on GDP PPP and manufacturing. Otherwise, in some other categories the PRC and USSR were further ahead than US.

Sorry, but claim that libertarianism is substantially due to Jews is much harder to defend than that many other ideological or philosophical movements are. Yeah, von Mises and Rothbard were, but not any other major leaders or founders or main figures now. I can think of a couple of Jewish libertarian economists, but neither is a leader, and they are way outnumbered by goyim.

And the LvMI in Auburn is a major haven of anti-Semites who support Holocaust denial. Its funders are heavily "paleo-conservatives" who are really into supporting privatized cities and roads that should have the right to keep out those they do not like, read blacks, Jews, you name it,

I'll concede that World War II was a boon for the Soviet Union. But certainly China did not come out on top after World War II. In fact, I think World War II interrupted the Civil War between the People's Republic of China and the Republic of China (present day Taiwan). I don't think China has really come out on top until very modern history. I'm also sceptical of realism in international politics due to economic linkages, doomsday weapons, the modern media, and the end of territorial acquisition as a means of gaining wealth (i.e. post-Britannia). This is not to say that the United States doesn't have an arms industry to maintain, for no apparent reason.

This is a very very silly analysis in a lot of ways. The biggest mistake is failure to realise that a situation where the US is inferior to the Russians and the Chinese *combined* is precisely what is required for a multipolar world to be stable. Otherwise, what stops one bad election from making the US into Nazi Germany number 2? No single power can be allowed to be so powerful.

The point is that the Russians and China are banding together because they see US moves as antagonistic.

"But now consider the combination of China and Russia, the other two victors of World War 2. These countries are each poorer than us on a per capita basis, which reflects the inferiority of their economic and political systems in terms of creating human welfare. But their draconian systems have, so far, allowed them to retain control over vast territories (17% of the world's land area) and huge populations (21% of humanity)."

Yyyyeah, I'm sure that China and Russia being behind in per capita GDP is a sign of the inferiority of their economic and political systems, and not the fact that they started the 20th century an order of magnitude behind the Western powers. I'm ssssure that the economic history of their current governments show a clear inferiority to the western US systems... And no doubt both China and Russia clearly benefitted from WWII. This can be *clearly* seen in the graph below.

http://i.imgur.com/ia858HJ.png

This also ignores the effort the US spent on isolating the communist bloc economically during the Cold War.

the US is one election away from Nazi Germany? This is deeply ignorant. Both of the history of Nazi Germany and the nature of the political system in the US. Hear of division of power?

As to the systems in Russia in China. Just compare Taiwan and mainland China. Notice any difference? South Korea was poorer than sub-saharan Africa in the 50's, yet it's almost as rich as us now and much richer than China or Russia. How's that happened?

yes, the history shows a clear inferiority of their systems to ours. Very clearly so.

Compare the systems, and note that Taiwan was a *military dictatorship until 1984*. You'll note the transition to democracy made literally no difference. Not being isolated economically did, and being a local priority of the US also helped - hence the meteoric rise of China after Deng's rise and the deal with Carter. Look at what became of democratic India.

Germany *had* division of power. Division of power did not in fact save Germany from Nazism. Heard of the Enabling Act? There is no system that can save a country from itself, if that becomes the will of its people.

The US did not isolate anybody. The communist regimes did that themselves. They needed their prisons called countries. I know. I lived in one. China is the perfect example. When they opened up to the world and gave up the old economic system, the growth exploded. Yes, openness to the world is part of the system. Within the soviet block, there was no internal openness, either. Prisons had to be kept tight.

Taiwan is again a perfect example, democracy arrived due to the success of the economy and not due to its failure.

As to the enabling act, you clearly do not understand the American system: the congress can pass an enabling act anytime it wishes, but it has to go through the courts and the states to become valid. That's the essence of division of power, there is no ONE instance of power that controls all the levels of the government. Obviously hysteria happens in this country, too, but it is much harder to implement sweeping takeovers of the government. Even FDR couldn't do it, even though he tried and partially succeeded.

Are you trying your best to prove to the rest of us that when experts step out of their field of expertise they sound like amateurs, even with a table you totally made on your own and everything? Because mission accomplished!